macrumors bot

Apple has changed its corporate bylaws [PDF] to require executives officers to hold three times their annual base salary in stock, with Non-Employee Directors holding five times their annual retainer and Tim Cook required to hold ten times his annual base salary in stock.

The requirement for executives went into effect February 6th, while the requirement for Cook and the Directors went into effect back in November.

Calpers discussed the new executive-ownership requirement with the Apple board before the meeting, according to Anne Simpson, head of corporate governance for Calpers, who declined to elaborate. The fund has long regarded executive stock ownership "as standard good practice," she said. "It's part of our conversation with all companies we engage." Ms. Simpson said in an interview Wednesday that "there are other changes in the works related to executive pay."

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Proposal No. 5, an item that was voted on at the recent Apple Shareholder's Meeting, would have required executives to hold 33 percent of their equity pay until retirement. Apple felt this requirement was too onerous and instead adopted stockholding requirements relating to base yearly salary.

The base salaries of most senior executives will be $875,000 for 2013, while Tim Cook's salary will be $1.4 million this year. Non-employee board members receive a $50,000 yearly retainer.

macrumors 6502

C. Compliance/Timing
The applicable guideline level of Company stock ownership is expected to be satisfied within five years after November 13, 2012 for the CEO and Non-Employee Directors, within five years after February 6, 2013 for Executive Officers or, within five years after first becoming subject to these Stock Ownership Guidelines.
Once the CEOs, Executive Officers, or Non-Employee Directors level of stock ownership satisfies the applicable guideline, ownership of the guideline amount is expected to be maintained for as long as the individual is subject to these Stock Ownership Guidelines.

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So they have 5 years to get to this level. I also see nothing regarding the timing or periodical nature of confirmation. Do they have to constantly review and determine if they meet this as the stock price fluctuates or is it just checked periodically (eg: 4 times a year)? Seems a bit ... odd.

macrumors regular

And also 1/48th of Ralph Lauren's. It's tiny in comparison to other CEO's of major corporations.

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I think most people would agree the executives pay should be based on the stock value and not a fixed annual salary that doesnt rise or fall based on company performance. All that matters is total compensation and Tim Cook certainly is being rewarded with significant compensation.

macrumors demi-god

Good to see. More companies should take this approach. I've always felt that the higher up the food chain you are, the more your compensation should be based on company performance. For CEOs it should be 75% to 90% of the total package. Company takes a loss for the year, then your pay goes way down. Companies that pay executives bonuses when they lose money should be driven out of business.

macrumors regular

Good to see. More companies should take this approach. I've always felt that the higher up the food chain you are, the more your compensation should be based on company performance. For CEOs it should be 75% to 90% of the total package. Company takes a loss for the year, then your pay goes way down. Companies that pay executives bonuses when they lose money should be driven out of business.

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But then how do you account for a decreased in performance due to factors which are out of your control. A CEO would say it was unfair that his pay was decreased if the company takes a loss if, say, the economy went into a recession that year.

It sounds like a good idea but I think it becomes a lot more complicated in practice.

macrumors 6502a

I think most people would agree the executives pay should be based on the stock value and not a fixed annual salary that doesnt rise or fall based on company performance. All that matters is total compensation and Tim Cook certainly is being rewarded with significant compensation.

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Uh no they don't. You assume that stock price is a direct function of how well a company is being run and that is ridiculous. Look at the different financial ratios and compare say Google and Apple. You will see that the stock price can move quite independently of good management by executives and objective measures of performance.

Also, lets say my compensation is all tied to stock performance. Let's see... how could I quickly pump up my stock price so I could sell and make a bunch of money. I could cut expenses. What is really expensive to companies? Oh yeah, people! They cost a lot. I'll layoff 5000 employees, cut expenses pump up my stock and make a fortune. Guess what? This has happened more times than you would like to know. I would rather have a CEO draw a huge salary than give him compensation that he has the direct ability to manipulate for his own selfish desires.

macrumors 6502

But then how do you account for a decreased in performance due to factors which are out of your control. A CEO would say it was unfair that his pay was decreased if the company takes a loss if, say, the economy went into a recession that year.

It sounds like a good idea but I think it becomes a lot more complicated in practice.

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in my job, if my company is failing - for whatever reason - I get paid less, through our bonus structure.

It doesnt matter if the problem is CEOrelated, or the market taking a dive, I get paid less. Hell, if head office change stuff that ultimately removes my depart,ments ability to make money, irrespective of the value we provide, we get less $$..

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